1. Field of the Invention
The present invention, according to a first aspect, relates to an electronic funds transfer method and system, and, according to a second aspect, an electronic bill presentment method and system.
2. Related Background Art
The current environment for payments involving business and banks is primarily a paper one. Businesses and banks have become masters of paper--business in handling payment remittances and banks in check processing. This efficiency in paper processing has created a weak or non-existent electronic bill payment infrastructure. The majority of businesses cannot post electronic payment information directly into their accounts receivable systems. The majority of banks do not have the ability to deliver remittance information to their business customers.
Banks are in a unique position at the center of the bill payment process. They hold the customer accounts from which payments are authorized and are uniquely positioned to deliver the remittance information to the biller. Banks are also positioned to deliver the invoice information to the billers' customers who are also the banks' customers.
Despite the widespread availability of ATMs and direct deposit of paychecks, most consumers have not embraced electronic payment systems. Discussion will follow of several prior art payment systems.
In conventional non-electronic bill payment systems, where an ongoing relationship exists, a party initiating payment (also referred to hereinafter as "payor" or "consumer") pays a debt to a biller by mailing a check in response to receipt of the biller's invoice. The term biller is used to refer to the payee or entity to be paid. Attached to most biller's invoices is a payment coupon to be returned with the check. The coupon contains at least the consumer-biller account number (C-B account number), as well as other information that will assist the biller, or the biller's bank, in properly crediting the consumer (i.e., the party initiating payment) with payment.
In recent years, with the common appearance of personal computers (PCs) in the home, electronic home banking has become increasingly popular. Electronic home banking systems permit consumers to automate the process of making payments to companies and individuals. Payment instructions are typically initiated by the consumer (party initiating payment) from the home PC terminal and forwarded electronically, generally over a telephone line, to the consumer's bank or other financial institution supporting home banking. In response to receipt of the payment instructions, payments are created by the bank or financial institution in a variety of methods. Payment instructions also have conventionally been transmitted via ATM or telephone touch tone keypad.
In one type of prior art electronic home banking system, illustrated in FIG. 1, the electronic payment instructions initiated by the consumer are converted by a bill pay service bureau, which may or may not be a bank, to a paper check, which is then mailed to the biller B, for eventual deposit into biller's bank account in bank B.
The electronic home banking system illustrated in FIG. 1 includes: consumer C 12, bank C 16, bank B 18, possibly a lockbox operator (not shown in FIG. 1), and biller B, who is typically not a willing participant in this system for reasons discussed further below. Additionally, a service bureau S 20 and a Bank S 22 are participants, with service bureau S maintaining a service database 24 that is used to match bill payment orders with billers.
In the bill pay system of FIG. 1, consumer C enrolls in the system by sending service bureau S an enrollment package comprising a voided check and list of billers to be paid by S on behalf of C. S subsequently sends biller B a biller confirmation to verify that C is actually a customer of B.
In the conventional, i.e., paper, bill payment method, the proper biller is identified by the remittance envelope and the payment coupon. However, neither of these are available to service bureau S in the system illustrated in FIG. 1. Thus, service bureau S must identify the correct biller for each bill payment order in some other manner. Typically, this is done by asking consumer C for biller B's name, address, telephone number and the C-B account number. Since it is possible that service bureau S does not have any account relationship with biller B, they must rely upon consumer C's accuracy in preparing enrollment package used to put biller B's information into service database 24. Service bureau S typically requires this information only once, during biller enrollment, storing it to service database 24 for use with subsequent payments directed to the same billers.
At some point after enrollment, consumer C receives a bill and initiates a bill payment order to S. The bill payment order includes authorization for service bureau S to withdraw funds from C's account in bank C to pay the bill, the amount to pay, the date on which to pay, and an indication of biller B as the payee. Service bureau S responds by confirming receipt of the bill pay order. Consumer C can send the bill pay order in any number of ways, such as using a personal computer and modem, directly or through a packet or other data network, via an automatic teller machine (ATM), video touch screen, a screen phone, or telephone Touch-Tone.TM. pad interacting with a voice response unit (VRU). However this is done, service bureau S receives one or more bill pay orders from consumer C. These orders could be instructions to pay some amount for a particular bill or a set amount of money at periodic intervals.
Once service bureau S has confirmed that biller B is the biller that consumer C desired to pay with the bill pay order, service bureau S passes the funds to biller B after securing funds to cover the remittance. Bill payment can take several forms. A "check and list" is common in the art. A check and list comprises a single payment, a check drawn on service bureau S's account in bank S, accompanied by a list of all consumers whose individual remittances are aggregated in the single check. The list shows C-B account numbers and payment amounts for each consumer included on the list that should total to the amount of the single check.
The system of FIG. 1 has several drawbacks. For one thing, in response to an invoice mailed to the consumer, the biller expects to receive: (1) a check directly from the payor, along with (2) the payment coupon having encoded thereon, among other things, the C-B account number. Receipt of the check from the bill pay service S, rather than from the consumer, and without the coupon, must be treated by the biller as an exception item, which generates a great deal of additional expense for the biller.
Moreover, from the point of view of the consumer (payor), such a system implementation is inconvenient at least because of the time delays involved in preparing the check. The consumer might assume that, because the transfer was initiated electronically, the payment to the biller was instantaneous, or at least performed more rapidly than if the consumer had mailed the check himself. In reliance upon this belief, the consumer might delay initiating a payment longer than he would if paying by his own check. Such a delay could result in late payments and customer relations headaches for the bill paying bureau.
Additionally, the system illustrated in FIG. 1 requires enrollment by the consumer in the system and requires that the consumer have a continuing relationship with the biller. Thus, this system is not useful for processing one-time, or infrequent, financial transactions.
Some of these problems could be solved by a system in which payment actually is made to the biller (payee) electronically, rather than by check. In one such system, described in U.S. Pat. No. 5,465,206, issued to Hilt et al., participating consumers pay bills to participating billers through a payment network. The participating consumers receive bills from participating billers (paper/mail bills, e-mail notices, implied bills for automatic debts) that indicate an amount owed, and a unique biller identification number (BRN).
In the Hilt et al. system, to authorize a remittance, the consumer transmits to its bank (also a participant in the system) a bill pay order indicating a payment date, a payment amount, the C-B account number, a source of funds and the BRN. The consumer's bank then submits a payment message to a payment network, and the payment network, which assigns the BRN's, forwards the payment message to the biller's bank. For settlement, the consumer's bank debits the consumer's account and is obligated to a net position with the payment network; likewise, the biller's bank receives a net position from the payment network and credits the biller's bank account. The biller's bank, upon receipt of the payment message, releases the funds to the biller, and provides Accounts Receivable (A/R) data to biller in a form that the biller has indicated, the form being one that does not have to be treated as an exception item to the biller, unlike in the system of FIG. 1. The biller's bank is assured of payment by the payment network, unless the transaction is a reversible transaction according to the preset rules of the payment network. In specific embodiments of the Hilt system, the consumer initiates the bill pay orders manually, via paper, at an ATM, via PC, or via telephone keypad.
However, because, in the Hilt system, the consumer initiating payment must know, among other things, a special identifier that uniquely identifies the biller, in this case the biller's BRN, this system is of limited usefulness for transactions between parties that do not have an ongoing relationship, where the consumer will likely only know the biller's name and address. In addition, the BRN's, which correspond to billers' account numbers, are disseminated to all payors, which may not be optimal for reasons of security.
Thus, the need exists for a system and method that would enable the payor to initiate an electronic payment without knowledge of a special identifier corresponding to the biller's bank and account number.
The need also exists for a system by which billers can present bills to payors electronically.